Question

A company is considering automating a portion of its production process, which is currently performed manually....

A company is considering automating a portion of its production process, which is currently performed manually. Which item is relevant to the company when deciding whether to automate the segment of the production process?

A. Direct labor costs

B. Depreciation of the sales office

C. Advertising expenses

D. Sales price of the product

Business   Accounting   
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Answer #1
Q. No. Correct Option Reason
1 Correct Option A i.e. Direct labor cost It mentioned that production process is manual. It means that company is incurring direct labor cost as a significant portion of its manufacturing cost. While deciding for automation, if depreciation of machine per unit if production will be lower than direct cost of labor per unit, then only company should move for automation. That's why direct labor cost is relevant in deciding for automation.
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